Transcription of Chapter 9 Basic Oligopoly Models - ubalt.edu
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Chapter 9 Basic Oligopoly Models - ubalt.edu
Copyright 2010 by the McGraw-Hill Companies, Inc. All rights Economics & Business StrategyChapter 9 Basic Oligopoly Models9-2 OverviewI. Conditions for Oligopoly ?II. Role of Strategic InterdependenceIII. Profit Maximization in Four Oligopoly Settings Sweezy (Kinked-Demand) model Cournot model Stackelberg model Bertrand ModelIV. Contestable Markets9-3 Oligopoly Environment Relatively few firms, usually less than 10. Duopoly - two firms Triopoly - three firms The products firms offer can be either differentiated or homogeneous. Firms decisions impact one another. Many different strategic variables are modeled: No single Oligopoly of Strategic Interaction Your actions affect the profits of your rivals. Your rivals actions affect your profits. How will rivals respond to your actions?9-5An Example You and another firm sell differentiated products. How does the quantity demanded for your product change when you change your price?
9-12 Sweezy Oligopoly Summary Firms believe rivals match price cuts, but not price increases. Firms operating in a Sweezy oligopoly maximize profit by producing where
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